Fiskars Group: EBIT intact despite 10% miss on topline - ABG

Magnitude of soft year-end misunderstood
In mid-December, Fiskars communicated an expected FY'22 adj. EBIT of EUR 150m, down from the previous guidance of EUR 154m. Today's communicated FY'22 adj. EBIT of EUR 151m is hence slightly above guidance, beating ABGSCe by 7% and Factset cons. by 2%. Topline figures were softer than expected, however. At EUR 304m (-14% y-o-y), Fiskars' Q4'22e net sales were 10% below cons. and 11% below ABGSCe. Fiskars continues struggling with retailer demand, especially in the US, but both ourselves and cons. had misjudged the magnitude of previously communicated order cancellations as the retailer part of sales declined by 26% LFL in the quarter. The soft development in US-focused Terra and Crea means, however, that the EBIT decline is not as marked due to the segment mix it entails. We expect that the full print will point to a relative outperformance for Vita. Despite limited deviations on margins, we believe that the significantly lower volumes delivered points to a soft cash flow for Q4'22e on account of a larger inventory build-up than anticipated.

Hard to decipher '23 implications
After large negative topline deviations with a retained margin, we could view this report as a show of strength. We wonder if Fiskars will continue to be able to support margins if Q4's soft momentum spills into '23e given the smaller scale of operations. Continuing to support profitability is the large inventory produced ahead of energy costs and the continued expansion of the Chinese efforts with the added D2C sales it entails, on the other hand.

Share trading at 12-9x '22e-'24e EV/EBIT, 13-10x P/E
On our unrevised estimates, Fiskars is trading at 12-9x '22e-'24e EV/EBIT. We recieve limited information in the report to have a strong conviction on '23e adj. EBIT estimate revisions, given that the outcome for Q4'22e was rather close to the mid-December guidance. Fiskars will publish the Q4 report on 7 Feb and host a webcast at 10 CEST to present the full outcome.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/fiskars-group/Equity-research/2023/1/fiskars-group---ebit-intact-despite-10-miss-on-topline/